The effect of business group affiliation on firm performance: A study on ISE

Business groups are example of a complex business structure that exist in many countries. This study is an empirical examination of the impact of business groups affiliation on various measures (ROA, ROIC, Tobin Q etc.) of firm performance in a emerging economy Turkey. A panel sample of 82 companies was constructed for the period 2002 to 2009, based on information obtained from ISE. For the purpose of this study, all firms are divided into three main subgroups: big business groups (powerfull private business groups), small business groups (weak private business groups) and non-affiliated independent companies. Our analysis indicates that affiliation with a big business group increase performance. On the other hand affiliation with a small business groups does not contribute to performance of firms.Key Words: Firm Performance, Performance Proxies, Business Groups, Holding Companies, Dynamic Panel Data Analysis